Mick Wallace (Wexford, Independent) | Oireachtas source

The changes proposed by this Bill are to be welcomed, although they come a bit late for many workers. The Government has known about the crisis in defined benefit funds for quite some time; therefore, the fact that it is now finally intervening in an increasingly volatile situation comes as a relief, not least to those in troubled defined benefit schemes. Sadly, the protections afforded to workers and pensioners, particularly the 50% guarantee of benefits, will not apply to those whose funds have already become insolvent. It is cruel and unjust to prohibit the retrospective application of this legislation. In effect, this will mean that workers in a double insolvency situation, who possibly paid into a fund for many years but then walked away with nothing, will not receive redress through this Bill while those who find themselves in the same situation after the Bill is enacted will see at least 50% of their benefits protected. How can we say that on the one hand it is acceptable for some people to be destitute - to have no, or very reduced, pension benefits - while on the other hand we protect 50% of the pension benefits of others simply because the law will not be applied retrospectively?

The second problem with this Bill is that the protection afforded to those at the bottom end of the spectrum is too low. The proposed 100% protection of pension benefits of €12,000 or less should be increased to twice this amount. That would make it two thirds of €36,000, which is considered the current average industrial wage. This could be done by increasing the 20% reduction proposed by the Bill on pension benefits of €60,000 and above. There should be a higher rate for those on pensions over €100,000. Even though this is likely not to yield much by way of additional funding, it is desirable in the name of equity and social solidarity. Most of us would agree that if a person had a pension of €60,000 per annum on finishing work, it would be unfair to say that person would not be in a comfortable position.

Pension benefits of over €100,000 should only take priority to 60%, while pensions over €60,000 should take priority to 70%. In this way, fears that those on low pensions might experience deprivation can be allayed. Age Action has also called for protection of low pensions to be increased beyond the €12,000 threshold set by Government. It said:

We do not believe that this level is sufficiently high, especially given that not everyone in a defined benefit pension scheme may be entitled to the State Contributory Pension. Alone, €12,000 per annum would leave people on the brink of poverty.

My third concern with the Bill is that the onus for providing the minimum 50% guarantee on all pension benefits in single insolvency cases is not explicitly and sufficiently placed on the employer. It is clear that in situations where the employer and the fund are insolvent and incapable of providing such coverage, the State will step in with the pension levy. However, in cases in which the employer is still solvent but the fund is insolvent, there is nothing in the Bill to compel the employer to step in to ensure the 50% protection. This must be addressed as a matter of urgency to ensure pension funds are truly protected up to 50%.

In general, the Bill should form part of a far more wide-sweeping reform package of pensions. At present, there are several anomalies in our pension system which particularly disadvantage women. A recent report by researchers in NUI Galway and Queen's University Belfast, entitled Older Women Workers' Access to Pensions: Vulnerabilities, Perspectives and Strategies, highlights the fact that gender inequality in pensions is pervasive in Ireland. The report finds that women experience lower access to pensions because of poor working conditions, low pay and their role in caring. Only 27% of those in receipt of the maximum contributory pension are women. Much of this gender inequality, and the inequality that has marked the Irish pension system for decades owing to generous tax breaks for high earners, could be redressed by introducing a model of universal pensions as outlined by Social Justice Ireland. In its study entitled A Universal Pension for Ireland, it put forward costed proposals for a universal pension system that is based on residency rather than on PRSI. Such a system would address issues with regard to women's access to pensions by addressing women's status as dependants and widows in the allocation of State contributory pensions. It would mean that every person, regardless of civil status, would be entitled to a minimum level of pension benefit in old age. Also, its proposals would see a modest increase in the current rate of the State pension under its plans to introduce a universal pension.

Most of us would agree that the area of pensions will have to become much more stable and predictable. We need less emphasis and dependence on the financial markets. It would be welcome if the Government came up with a scheme under which, in regard to any tax reliefs for these pensions, the money must be invested in Ireland rather than in other corners of the planet being used for purposes we do not know. For all we know, much of it could be used for unethical purposes. During the past 30 years the arms industry was probably one of the best places to invest money. It is a powerful industry that is doing very well, but in that case people would not know where their money was going. If the money was invested in Ireland, and we were sure of that, it would be a double win for everybody.

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